Mis-Sold Mortgages – “The Perfect Storm”

On the 31st October 2004, the Financial Services and Markets Act 2000 included a raft of MCOB rules that gave rise to brokers and lenders being regulated.

The onus to lend prudently fell squarely on the shoulders of the lender and gave rise to examining the ethics of numerous lenders that, following the 2008 global financial crisis, became known as “sub-prime lenders”.

It was commonplace to offer interest-only mortgages to customers with no means or provision for repaying the capital at the end of the term and sometimes to extend the term far beyond retirement age.

As lenders wanted to lend more money, they relaxed their criteria to allow “self- certification” whereby the customer simply confirmed that they earned a sufficient amount to repay the loan.

These are just a few examples of the lax lending criteria that led to customers being shackled with mortgages they could ill afford and very little option but to cut their losses and downsize in view of the strict lending criteria that currently prevails.

Although the legislation to curtail the shoddy lending practices that had become commonplace came into existence close to ten years ago, it was only after the financial crisis of 2008 that the number of UK lenders was reduced by 40% and the number of mortgage products fell by 93%.

This demonstrates the mass exodus of sub-prime lenders from the market place and consequently the very limited options available to those that had been mis-sold.

The Legal Consultancy has identified the need for a specialist claims management company to investigate potential claims by enlisting the help of an independent company to carry out a substantive expert witness report.

This allows for a front loaded process of investigation and examination of the facts before the case is validated for quantum and merit and sent with the accompanying report to a specialist firm of solicitors to litigate. This ensures that the case is progressed in the most efficient way possible.

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